Maersk planning changes to U.S.-West Med services

Wednesday, April 24, 2013

Maersk Line will discontinue its participation in two direct services, its West Med and Med Gulf strings, later this spring in favor of a feeder network to serve Mediterranean ports in Italy, France, and Spain.
Moshe Loberant, the trade manager for Maersk’s services between North America and the Black Sea and Mediterranean, said the carrier is “strengthening our backbone” between the United States and Mediterranean, Middle East and Indian subcontinent - the so-called MECL 1 and MECL 2 services - and use them to transship cargo through Algeciras to and from Western Mediterranean destinations.
In Algeciras, MECL 1 and MECL 2 will connect with four services operated either by Maersk or its sister company Seago to and from:

Barcelona and Valencia in Spain.

Genoa and La Spezia in North Italy.

Livorno, Salerno and Naples in South Italy, as well as Marsaxlokk in Malta.

Fos Sur Mer in France.

Maersk said "the new product will offer a Genoa-Newark 13-day transit and 18-day transit from Newark to Livorno, ensuring competitive and, in many cases, improved end-to-end transit time."
CMA CGM, which has been in a vessel-sharing agreement with Maersk on the West Med service, will link up with Hapag-Lloyd. The service, called the Amerigo by CMA CGM and MAS by Hapag-Lloyd, will have a New York, Norfolk, Savannah, Tangier, Valencia, Marsaxlokk, Livorno, Genoa, Fos, Barcelona, Valencia and New York rotation. It will replace both CMA CGM’s old Amerigo service and Hapag-Lloyd’s MNX service.
Maersk had also been a slot purchaser from Hapag-Lloyd’s MGX service which connected the Med with ports in both the U.S. Southeast as well as U.S. and Mexican ports along the Gulf of Mexico. CMA CGM will participate in that service in what it calls the “Florida Shuttle.”
In addition to serving Italy, France and Spain through Algeciras, Loberant said the MECL ships will be used to transship cargo into the Eastern Med and Black Sea—some through feeders that call Algeciras, some through feeders calling Port Said in Egypt.

Maersk Carolina

He said the size of the ships in the MECL 1 string, estimated by BlueWater Reporting currently to average 4,288 TEUs, will be increased to about 6,500 TEUs, while the MECL 2 ships, estimated by BlueWater to average 4,488 TEUs, will remain, for the moment, the same size.
Loberant said Maersk will change from serving the Western Mediterranean with direct services to using the MECL services and feeders in May and June.
The two MECL services are notable because they include large numbers of U.S.-flag ships. The MECL 1 service has seven U.S.-flag vessels that offer weekly service. Maersk said that number will be increased to eight. The MECL 2 service currently has 10 vessels, half of which are U.S.-flag, so that Maersk is able to offer a fortnightly U.S.-flag service on that string. The number of U.S.-flag ships in the MECL 2 string will be changed to four.
Loberant said the intent is to continue to offer U.S.-flag service, even as the ships in the MECL 1 string are upsized.
“Our U.S.-flag service is going to be more robust now," he said. "It is going to be the spine and then we can feed into that service.”
Loberant said the new arrangement would allow the company to reduce the number of Panamax vessels it's using, which he said are “notorious gas guzzlers, uneconomical. The economies of scale were just not there.”
Loberant said the market between North America and the West Mediterranean has been “at best, marginal” for a decade.
“None of the other carriers are really raking it in, it’s not growth trade. It’s a very mature trade and it has an overcapacity of approximately 35 percent,” he said. “We decided it is about time to make a change in how we approach that market.”
Last month, Drewry’s Container Insight publication estimated that between December 2012 and February 2013 ship utilization in the Mediterranean-North America trade has ranged between 70-75 percent westbound and 58-63 percent eastbound.
Loberant said the changes Maersk will make will actually decrease capacity in the trade lane between North America and the Mediterranean and Black Sea by about 1 percent.
In contrast to the West Med, Loberant said trade to countries either bordering or reached through the Black Sea has been growing. These include Turkey, Ukraine, Romania, Russia, Georgia and other countries in the Cauacsus and various “-stan” countries that were once part of the Soviet Union.
Other parts of the East Med and North Africa are also growth markets, but he noted political instability has dampened trade there. - Chris Dupin